Middle class Michiganders to pay considerably more in taxes despite the anti-tax rhetoric of Lansing Republicans

Reading an article in the Detroit Free Press this evening about how taxes are going up precipitously on working class Michiganders, I’m reminded of something that I wrote about a year ago for this site. Here’s how my post began.

Why is it that we allow the Republicans to refer to themselves as the anti-tax party, when they keep demonstrating that they clearly aren’t? Sure, they’re all for the cutting of business taxes, inheritance taxes, and other taxes that would threaten to decrease the wealth of their party’s high-net-worth donors, but, invariably, those shifts in tax policy lead to higher taxes for everyone else. Elsewhere around the United States, the shift may not be as plainly visible, but, here, in Michigan, it’s painfully obvious to all but the most delusional among us. As business taxes are being eliminated, and corporate taxes on capital assets are being phased out, the burden of maintaining public services is falling disproportionately on the shoulders of the non-wealthy, and we’re all feeling the increased financial pressure.

In Michigan, income taxes on the poor and middle class are rising, the pensions of our retirees are being taxed, tax credits for the working poor, like the Earned Income Tax Credit (EITC), are being slashed, and, with state assistance for higher educationdrying up, families are going into unprecedented debt in the hopes of securing stable futures for their children. The Republicans may not see all of these as tax increases, but they are. The increased insurance payments that many of us are forced to pay, because our local fire departments are being downsized, is essentially a tax. The same goes for the private school tuition that several of us are paying, rather than suffer through the constrictions of a public school system which is being systematically dismantled. And these few examples are just the tip of the iceberg. The truth is, it’s becoming increasingly difficult for regular working people in Michigan to merely sustain life. Fortunately for those in power, houses aren’t selling. If they were, I suspect that most of us would be gone.

And, as those of us in Ypsilanti can attest, it’s the folks who are living in Michigan’s aging cities that are feeling the brunt of this radical redistribution of wealth. With state revenue sharing for cities dropping precipitously, one-by-one communities are being asked to make the choice — either institute a personal income tax, and pay for our own city services, or submit to the rule of an unelected Emergency Financial Manager, who will be empowered to sell off our community assets at fire sale prices, dismiss our democratically elected officials, privatize city services, and break contracts with city employee unions, essentially stripping our carcass of what little meat there is left, and sealing our fate. As long as we don’t ask the wealthy in Michigan’s upscale gated communities to contribute toward the greater good, it’s all the same to the folks in Lansing. They’re allowing us to make the choice…

And this is apparently the tax season when we’re really going to start to feel it. Here’s the news from the Free Press.

In the height of tax season, don’t be surprised if you owe more to the taxman in Lansing.

Some major income tax changes approved 21 months ago by Gov. Rick Snyder and lawmakers are just now starting to hit Michigan taxpayers filing their state tax returns.

One of the most significant adjustments: Homeowners and renters used to qualify for a credit if their household income was no more than $82,650 a year. Now they don’t get it unless their total household resources are $50,000 or less and their home’s taxable value (roughly half the market value) is no more than $135,000.

That will affect about 400,000 returns.

The child deduction is gone. So are special exemptions for seniors and those getting at least half their income from unemployment checks.

A refundable credit for low-income workers was reduced, impacting about 783,000 returns. Eliminated are state credits for city income taxes, college tuition, adoptions and donations to universities, public radio and TV stations, food banks and homeless shelters.

Add it up and about half of all Michigan filers are seeing a considerable tax increase ahead of the April 15 deadline, said Terry Conley, a tax partner at Grant Thornton in Southfield…

For those of you who still aren’t grasping what’s happening, you might want to take a few minutes and check out this animated short produced by the California Federation of Teachers, featuring narration by Ed Asner. It does a pretty good job of getting right to the heart of the matter in a way that even the most uninformed Tea Partier could comprehend.

[Tonight’s post is brought to you by Amazon.com’s Pitchfork and Torch division.]

18 Comments

I don’t see how rank and file Republicans keep electing these men. I know that people say it’s because they think that they’ll be millionaires one day too, once the government is smaller, and less able to hold them back, but is that really a sufficient explanation? How anyone could look at the hard facts on wealth inequality and come away with anything other than an understanding that our nation is being crushes by they wealthy for their own gain, is unfathomable to me.

We got our taxes done last night and saw an $800 – $1000 drop in our state tax return, right off the top. This from our lower tax Gov. If it were going to schools or something besides tax breaks for big businesses, I wouldn’t really mind. My fear is that some of it went to the Corner Brewery.

I was going to challenge EOS and some of the other Republican regulars to comment on this, but I suspect they’d just say that this demonstrates why we need to cut back even more on police, fire, roads and schools. I think they’re unable to see the big picture, even when presented in comic book form.

Not a complete explanation as to why regular people support these men, but a good start.

The deeper causes of this lunacy lie beyond the GOP, for the party is a symptom of a peculiar American sociology as much as the Republican Party is a cause of many of the political ills we face. One suspects the real cause is ultimately a confluence of long-term historical trends. The 40-year-long deindustrialization of the country and the associated weakening of upward mobility for blue-collar Americans are significant factors. Along with deindustrialization came the catastrophic decline of industrial unions, which had once been a secular political outlet for constructive action and social assimilation for workers. The symbiosis of politics and religion in American life, a phenomenon almost unheard of in other advanced democracies these days, infused many politicians with a taste for self-righteousness and apocalyptic brinksmanship that are fatal to a system designed for separation of powers, compromise, and moderation. Finally, the Cold War lasted too long, and left a permanent garrison state; it also left a paranoid world view that demands enemies foreign and domestic. If the monolithic world Communist conspiracy is no longer with us, the Muslim caliphate will serve nicely in its stead. If there is no longer an internal Red menace boring from within, there is a secret Muslim poised to become CIA director.

WHEN HE RAN FOR governor as a political neophyte in 2010, Rick Scott’s main credential was his vast wealth, much of which he accumulated running Hospital Corporation of America. During Scott’s tenure, HCA was caught systematically defrauding federal health programs of millions of dollars through elaborate schemes to overbill the government for various services, including care it never provided. In 2000, the company pleaded guilty to 14 federal felony charges and paid $1.7 billion in fines in what was the largest government fraud settlement in history. A few months after the federal investigation was announced, Scott was forced to resign, but not before snagging a $310 million golden parachute.

Scott was not the choice of the state’s GOP establishment, but tea partiers loved him for his opposition to Obamacare and devotion to fiscal austerity, and he won the governorship by a single percentage point in 2010. Conservative Republicans also picked up seats in the Legislature, giving the GOP a supermajority at a time when Florida was facing a $3.6 billion budget shortfall.

Florida has never been known as a big-government state. An economy driven by tourism and real estate speculation has at times made it a haven for the less-than-scrupulous rich—Florida law helped O.J. Simpson shelter his assets in a mansion near Miami and avoid paying a civil judgment he owes Nicole Brown’s family. With no personal income tax, Florida collects some of the lowest taxes in the nation, leaving the government chronically starved for cash.

Even so, Scott rode into office with a promise to slash spending further. He unveiled his first budget in February 2011, at a private meeting with tea party activists, and publicly released it at a tea party rally.

The “jobs budget,” as Scott dubbed it, called for $4.6 billion in spending cuts, with education taking the biggest hit ($3 billion). It included a 17 percent cut to the agency that serves the disabled and proposed dropping virtually everyone but children and pregnant women from a state health program for the medically needy. The savings would be used to slash the corporate income tax from 5.5 to 3 percent, with the goal of eliminating it entirely by 2018. The budget also called for reducing property taxes by $1.4 billion, and cutting unemployment insurance taxes by $300 million, even though Florida’s unemployment trust fund was bankrupt. US News columnist Peter Roff dubbed Scott’s budget a “tea party dream” and speculated, somewhat prematurely, that it “almost assuredly gets him on the short list for vice president in 2012 or, depending on the outcome of that election, for president in 2016.”

Scott didn’t get everything he wanted, but the final budget approved by the Legislature was $4.6 billion smaller than it had been in 2006, even though the state’s population had grown by more than 700,000. And Scott vetoed a record $615 million worth of spending for, among other things: homeless veterans, meals for seniors, whooping-cough vaccines for low-income mothers, an independent living center for the developmentally disabled, and, of course, public radio.

The effects were felt almost immediately, from the state level—nearly 4,500 state jobs were eliminated—to local governments. In Broward County, the school system laid off 2,400 employees, mostly teachers. The Polk County school district sacked all of its college advisers, a move that prompted the wife of a tea party congressman, Rep. Dennis Ross (R-Fla.), to spearhead a fundraising effort to try to save them. (In the end, Cindy Ross, a member of a local high school’s booster club, wasn’t able to preserve the jobs, which had previously been protected by the 2009 stimulus—a measure her husband ran against.)

Florida already had a 10.6 percent unemployment rate and one of the stingiest unemployment benefits in the country—recipients max out at $275 a week. After Scott’s cuts, the percentage of unemployed people who received benefits fell from 17 to 15 percent—far below the national average of 27 percent. One reason: Florida now requires the jobless to take a 45-minute online math and reading test before even applying for benefits, a move the National Employment Law Project calls an “unnecessary burden” that may violate federal law. “Nowhere in the country is it this hard to get help when you lose a job,” said Valory Greenfield, a staff attorney at Florida Legal Services.

I’m continually amazed at the ease with which so many people are misled. I’m not rich, have no hope of ever becoming rich, and no desire to become rich. I’m lower middle class and am working full-time trying to keep from losing ground. I don’t envy wealthy people and don’t blame them exclusively for societal ills. I have paid taxes every year that I have worked, and pay an increasing amount each year. My annual raises don’t keep up with the real inflation rate and my savings are being diminished in real dollar value because the Fed is pumping fiat money into the system. I strongly suspect that the money I have put aside for retirement will be used to exclude me from obtaining any social security once the Ponzi scheme collapses, even though I will have contributed for more than 50 years.

Truth is we are paying more per pupil for public education than ever before, yet fail to minimally educate the majority. We continually elect politicians who line their own pockets because they promise to give us the most stuff. Dishonesty, greed, and corruption are prevalent at every level of both private and public institutions. When caught in the act, there is no longer any shame, as the responsible party merely points to a bigger fish and claims they are worse. A greater percentage of citizens become dependent on government handouts each year and now even non-citizens claim the government owes them. Millions of Americans no longer even look for work and disability claims are at an all time high. Though we are quickly approaching the point where we will not even be able to pay the interest on our outstanding debt, at least 50% of the population are clamoring for even more government benefits. Many claim the government should provide housing for everyone since they spend exorbitant amounts on the military. Because we provide billions in foreign aid, many feel that free health care is a right. Those who suggest we control the waste and excess and spend tax dollars only on the real essentials are openly ridiculed.

A growing segment of our population feels that making a minimal effort at a 40 hour a week job should allow them to earn similar incomes to business owners, who risk all their capital and invest significant efforts to make a business thrive and provide employment opportunities for many. Although capitalism has a proven track record and has enabled the highest standards of living for the greatest number of people, many today argue that profits are evil.

But go ahead and laugh at some stupid cartoon that hopes to create greater levels of class warfare to distract from the real issues of the day. Pretend that Democrats are smart and Republicans are stupid and that there are no other possible options than to continue business as usual.

I’ll concede the fact that more people appear to be reliant on the government. I don’t know for certain that it’s true, but it seems likely to me, so I won’t fight you on it. And I agree that, if it’s true, it’s a trend that doesn’t bode well. It says to me that people don’t think that they can get ahead on their own. The deck is stack against the none wealthy in this country. The rich are contributing at historically low levels. The wealth gap is growing. Education has always been the great leveler, and now the rungs of that ladder are disappearing. So, no, it doesn’t surprise me that people are becoming content to go on welfare. Its exactly what I would have predicted.

Thanks for your comment anonymous. What do you think we can do to restore the hope of people to get ahead by their own efforts? The deck has always been stacked but large numbers of persons have historically achieved in spite of that. What’s different now?

It’s not always been like this, at least not to this extent. This was considered the land of opportunity. People, through hard work, could make better lives for their families. That’s becoming less and less the case now. The facts on income inequality don’t lie.

“the burden of maintaining public services is falling disproportionately on the shoulders of the non-wealthy, and we’re all feeling the increased financial pressure.”

I’m never sure where I stand on this, particularly when one considers the hefty consumption (VAT) taxes of countries like Sweden. At 25%, that’s no joke. Despite this, public services are excellent in that country and inequality low, given the constant reinvestment of tax money back into the community.

It could be the case, that our progressive system, by shifting the burden of responsibility to entirely disinterested parties is actually working against us.

It’s just a thought that I have from time to time. People accept it as a given that the wealthy must pay for public services and the poor should be exempt, but there are cases around the world where everyone pays (Sweden, Denmark) and the system works smoothly. Granted these models may not be applicable to the States.

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[…] on just staying one step ahead of the axe, we’re missing the bigger issue, which is that this is all part of a coordinated campaign to decimate Michigan’s middle class. Here, with more on that, is a little something that I wrote a year or so ago. I think it’s […]

[…] across the country, seeing the earnings of working class Americans steadily regressing, as the tax burden is increasingly being shifted onto their backs, are beginning to demand a change, though. In spite of the efforts of pro-corporate groups like […]